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Release Date: 09/04/1998
Release Number:
98-143
Contact Name: Sharon Morrissey
Phone Number: 202.219.8921
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The U. S. Department of Labor has obtained a
judgment against a former investment advisor for executing speculative
securities investments and “churning” of the account of the Bradford
Sales Co. employee stock ownership plan (ESOP) located in Charlotte, NC. The
defendant George E. Brooks was permanently barred from serving as a plan
fiduciary to any employer-sponsored plans under the aegis of the Employee
Retirement Income Security Act (ERISA). |
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Bradford Sales Co., which manufactures and sells
plumbing supplies, originally created the retirement plan as a profit sharing
plan and converted it to an ESOP in 1994. The ESOP covered as many as 51
participants and had $2,360,024 in assets as of July 31, 1994. |
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At the time of the improper trades, Brooks
executed the brokerage transactions on behalf of the profit sharing plan. The
plan’s trustees filed a complaint with the National Association of
Securities Dealers in 1995 and have since recovered $892,218.84 in losses from
Brooks and his former employer. |
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The Labor Department lawsuit alleged that Brooks
conducted short-term trading in speculative securities, margin purchases and
churning of the plan’s accounts for which he received commissions in
addition to quarterly investment fees. Brooks also was alleged to have filed
fraudulent Form 5500 reports which did not disclose the margin debt, which
resulted in losses to the plan. |
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The judgment, entered on Sept. 3 in federal
district court in Charlotte, N.C., resulted from an investigation conducted by
the Atlanta Regional Office of the department’s Pension and Welfare
Benefits Administration (PWBA) into potential violations of ERISA. |
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(Herman v. Brooks)
Civil Action No.
398-CV-288 MU |
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U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
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